Arax Holdings Corp SEC 10-Q Report

Arax Holdings Corp, a company specializing in blockchain technology and software solutions, has released its Form 10-Q report for the quarter ended July 31, 2024. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the current market environment.

Financial Highlights

The financial performance of Arax Holdings Corp for the three and nine months ended July 31, 2024, shows a significant decrease in revenue and net loss compared to the same periods in 2023:

• Revenue: $0 for the three months ended July 31, 2024, compared to $228,518 for the same period in 2023. For the nine months ended July 31, 2024, revenue was $528,636, down from $682,290 in 2023.
• Gross Profit (Loss): $0 for the three months ended July 31, 2024, compared to $228,518 for the same period in 2023. For the nine months ended July 31, 2024, gross profit was $528,636, down from $682,290 in 2023.
• Loss from Operations: $(329,765) for the three months ended July 31, 2024, compared to $(2,608,042) for the same period in 2023. For the nine months ended July 31, 2024, the loss was $(802,129), down from $(5,130,730) in 2023.
• Net Loss: $(433,266) for the three months ended July 31, 2024, compared to $(2,273,299) for the same period in 2023. For the nine months ended July 31, 2024, the net loss was $(905,932), down from $(5,131,480) in 2023.
• Net Loss Per Share, Basic and Diluted: $(0.00) for the three months ended July 31, 2024, compared to $(0.02) for the same period in 2023. For the nine months ended July 31, 2024, the net loss per share was $(0.01), down from $(0.10) in 2023.

Business Highlights

Arax Holdings Corp has been actively engaged in various business operations and developments:

• Service Offerings: The company provides a range of services through subscription-based access to browser-based software platforms, utilizing blockchain technology for secure and transparent transactions.
• Use Cases: Development of tailored solutions incorporating both physical inventory and software components, customized for each client.
• Cost Sharing: Co-investment in initial setup infrastructure costs with government or enterprise partners.
• Revenue Model: Primarily derived from subscription fees and transaction fees associated with blockchain interactions.
• Geographical Performance: Operations include providing software and logistics services to a company in South Africa and acquiring financial licenses in Switzerland under the entity Cilandro.
• New Product Launches: Continued development of software solutions that work exclusively on the Core Blockchain, aiming to maximize revenue generation from this new technology released in May 2022.
• Future Outlook: Management intends to explore and identify business opportunities within the U.S., including potential acquisitions through reverse mergers, asset purchases, or similar transactions. The company is also evaluating additional acquisitions of software technologies.
• Operational Challenges: The company faces risks and uncertainties, including the continued negative effects of the coronavirus pandemic on the U.S. and global economies.
• Business Strategy: Plans to fund working capital requirements through a combination of existing funds and future issuances of debt or equity securities, with an expectation of increased working capital requirements in line with the implementation of the business plan and commencement of operations.

Strategic Initiatives

Arax Holdings Corp has undertaken several strategic initiatives to enhance its business operations and expand its market presence:

• Acquisitions: Completed the acquisition of Core Business Holdings for $18 million, focusing on intellectual properties related to blockchain technology. Acquired Cilandro SA, a Swiss entity, for $268,000, which included a financial license to support its Central Business Digital Currencies initiatives.
• Capital Management: Issued convertible promissory notes totaling $362,000 during the nine months ended July 31, 2024, with conversion options into common stock. Settled a $44,000 short-term borrowing by issuing 110,000 shares of common stock, resulting in a loss on extinguishment of $103,400. Issued 611,747 shares of common stock for services, valued at $721,800, and reduced common stock to be issued by 816,225 shares in connection with the Core Business Holdings acquisition. Additionally, issued 500,342 shares of common stock upon conversion of convertible notes and 110,000 shares for short-term borrowing settlement.
• Future Outlook: Plans to continue its strategic focus on expanding its software and blockchain technology offerings. Intends to explore and identify additional business opportunities within North America, Europe, Asia, and Africa, including potential acquisitions through reverse mergers, asset purchases, or similar transactions. Management aims to raise additional capital through sales of equity securities and borrowing to support its operations and development activities. However, the company acknowledges substantial doubt about its ability to continue as a going concern and the need for additional financing to sustain operations over the next 12 months.

Challenges and Risks

Arax Holdings Corp faces significant challenges and risks, which include:

• Limited Capital Resources: The company has limited capital resources, which may hinder its ability to develop operations and meet cash needs.
• Dependence on a Single Business Combination: Due to limited capital, the company may only be able to effect one business combination, posing a substantial risk due to lack of diversification.
• High-Risk Industries: Potential acquisitions may be in high-risk industries or early stages of development, increasing the risk of financial instability.
• Management Experience: The company's management has limited experience in certain industries, which may affect their ability to properly assess and mitigate risks.
• Economic Conditions: General economic conditions, including the negative effects of the coronavirus pandemic, may impact the company's ability to identify and implement a viable business strategy.
• Regulatory Risks: The company is subject to regulatory risks, including the need to comply with SEC filing requirements, which may incur significant costs.
• Going Concern: The company's financial statements as of July 31, 2024, indicate insufficient capital resources to sustain operations or complete planned activities for the upcoming year, raising substantial doubt about its ability to continue as a going concern.
• Liquidity and Capital Resources: The company does not have sufficient working capital to fund operations over the next 12 months and is dependent on convertible debt financing and funds from an entity controlled by the company's Chairman. Additional financing may not be available on acceptable terms, which could restrict business operations.

SEC Filing: Arax Holdings Corp [ ARAT ] - 10-Q - Sep. 23, 2024